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14 Oct 2018

Scope of Restaurant Service and Outdoor Catering Service

Recently, in the case of Commissioner of Customs, Central Excise & Service Tax, Noida v. Fortune Cookie (2018) 96 taxmann.com 390 (Allahabad - CESTAT), the honourable Tribunal held that any restaurant taken on rent from some club or alike and restaurant is providing food to its members, service shall be classified under category of restaurant service.

In this case, the assesse has taken a restaurant premises on rent from Noida Golf Course and providing food to the members of Golf Course. The department had filed an appeal against the order passed by where the ld. Commissioner (Appeals) on the contention that that the activity undertaken by the respondent duly fall under the category 'restaurant service' and not under 'outdoor catering service'.

Wherein 'outdoor caterer' means a caterer engaged in providing services in connection with catering at a place other than at his own but including a place provided by way of tenancy or otherwise by person receiving such services. As per section 65(105)(zzzzv), the 'restaurant service' means 'any service provided or to be provided to any person, by a restaurant, by whatever name called having the facility of air conditioning in any part of the establishment, at any time during the financial year, which has license to serve alcoholic beverage in relation to serving of food or beverage including alcoholic beverage or both in its premises'.

Based on the above definitions, the 'outdoor caterer service' is to be provided at the premises of the service recipient at his own premises or the premises taken on hire by the service recipient, whereas in the case of 'restaurant service' to be provided by the service provider in its own premises.

The same issue has also been studied by the Hon'ble Apex Court in the Tamil Nadu Kalyana Mandapam Assn.'s case (supra) wherein the Hon'ble Apex Court has observed as under:-

"Similarly the services rendered by outdoor caterers is clearly distinguishable from the service rendered in a restaurant or hotel inasmuch as, in the case of outdoor catering service the food/eatables/drinks are the choice of the person who partakes the services. He is free to choose the kind, quantum and manner in which the food is to be served. But in the case of restaurant, the customer's choice of foods is limited to the menu card. Again in the case of outdoor catering, the customer is at liberty to choose the time and place where the food is to be served. In the case of an outdoor caterer, the customer negotiates each element of the catering service, including the price to be paid to the caterer. Outdoor catering has an element of personalized service provided to the customer. Clearly the service element is more weighty, visible and predominant in the case of outdoor catering. It cannot be considered as a case of sale of food and drink as in restaurant."

Honourable tribunal observed that the services provided by the assesse in a restaurant of Noida Golf Course are in the nature of 'restaurant service' as assesse is maintaining menu card, prices fixed in every item and there is no personal interaction with the service recipient in the restaurant.